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“Only buy something that you’d be perfectly happy to hold if the market shut down for 10 years.”

— Warren Buffett

Investors can learn a lot from Warren Buffett, whose above quote teaches the importance of thinking about investment time horizon, and asking ourselves before buying any given stock: can we envision holding onto it for years — even a decade-long holding period possibly?

Suppose a “buy-and-hold” investor was considering an investment into Discovery Inc (NASD: DISCA) back in 2009: back then, such an investor may have been pondering this very same question. Had they answered “yes” to a full decade-long investment time horizon and then actually held for these past 10 years, here’s how that investment would have turned out.

Start date: 11/27/2009
$10,000

11/27/2009
$20,691

11/26/2019
End date: 11/26/2019
Start price/share: $16.13
End price/share: $33.36
Starting shares: 619.96
Ending shares: 619.96
Dividends reinvested/share: $0.00
Total return: 106.82%
Average annual return: 7.54%
Starting investment: $10,000.00
Ending investment: $20,691.25

The above analysis shows the decade-long investment result worked out well, with an annualized rate of return of 7.54%. This would have turned a $10K investment made 10 years ago into $20,691.25 today (as of 11/26/2019). On a total return basis, that’s a result of 106.82% (something to think about: how might DISCA shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

One more investment quote to leave you with:
“Value investing is at its core the marriage of a contrarian streak and a calculator.” — Seth Klarman